AARP comes out against COLA cut

AARP unveiled new research from its Middle Class Security Project yesterday, with related papers focusing on topics ranging from rising health care costs to credit card debt. At the release, AARP CEO Barry Rand gave a rousing speech, coming out strongly against a proposed cut in the Social Security cost-of-living adjustment (COLA), echoing a similar stance by the New York Times this Sunday. Rand focused on the need for both solvency and adequacy, emphasizing that Americans don’t want Social Security reform to be part of deficit reduction talks and were willing to contribute more to strengthen the program.

Policy director Debra Whitman, an economist and Social Security advocate Rand hired to replace the too-quick-to-compromise John Rother, said most Americans were surprised at how low Social Security benefits were—less than $14,000 per year on average. In the report, Whitman and her co-authors highlight the fact that benefits would be cut further for future retirees with a scheduled increase in the normal retirement age to 67, equivalent to an across-the-board benefit cut. As a result of this and other negative trends, the report estimates that three out of 10 middle-income workers will become low-income retirees.

This might seem like an obvious place to call for shoring up Social Security benefits for the middle class—or at least halting their decline. But though Whitman and many of her colleagues may prefer to close Social Security’s projected shortfall with revenue increases, AARP continues to avoid ruling out additional benefit cuts or endorsing specific revenue proposals, such as lifting the cap on taxable earnings. This might seem like a wise PR move, given the flak AARP gets for drawing a line in the sand (even when it actually hasn’t). But, like President Obama’s administration, AARP will be attacked as intransigent by some critics no matter how conciliatory they are, so they might as well stake out a clear position, backed up by the facts in this report.

Contrary to stereotype, AARP’s influence is limited, as Democrats routinely ignore core constituencies and Republicans alternately attack the senior lobby and try to usurp the mantle of senior advocate. Though taking a clear stance won’t guarantee success, AARP’s obfuscation has ensured that in the midst of a retirement security crisis, “no more cuts” has emerged as the left flank, not the center.

Instead, both AARP and the administration have in the past lent tacit support to the idea that some benefit cuts are inevitable, though the administration has been far worse, offering up the COLA cut on a silver platter. It would be one thing if this were motivated by deficit concerns, however misguided. But as Rand makes clear, Social Security doesn’t contribute to the federal debt in the long term, and the priority today must be jobs and economic growth, not deficit reduction.

It’s unfortunate that the AARP report calls for improving Social Security benefits only for the “most vulnerable,” while increasing incentives for “middle-class” families to save in retirement accounts—a nice gift to the mutual fund industry. And while it was good to hear Rand cite the $6 trillion Retirement Income Deficit estimated by the Center for Retirement Research on behalf of Retirement USA, EPI and other participants in that initiative did not intend this to be a way to promote IRAs or 401(k) plans.

Still, AARP may be getting its mojo back. The principles for reform it sets, particularly Rand’s statements that it makes no sense to focus on the solvency of Social Security while ignoring its adequacy, are very welcome and very timely.

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EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.